Noel Tata seeks Tata Sons meeting video, minutes; questions legal opinions on Chandrasekaran reappointment

Mumbai: Tata Trusts chairman Noel Tata has written to the Tata Sons board, seeking details of the video recording and minutes of the September 17 meeting that decided to reappoint N Chandrasekaran as its chairman, executives familiar with the matter said.

In the communication dated September 30, he also called out the manner in which the board submitted two legal opinions to validate Chandrasekaran's reappointment after the meeting in which the decision was taken. Noel Tata said he was not given an adequate opportunity at the meeting to detail specific points from the legal view he obtained from former Chief Justice of India DY Chandrachud, the executives said. According to them, Noel Tata claimed that the resolution was passed as a "debrief from the NRC (nomination and remuneration committee)."

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From the Chandrachud report, the executives said, Noel Tata wanted to raise the points on casting vote and Tata Sons' articles of association (AOA) which, according to him, must be read in context of the original contents of the AOA and the changes made over a period of time.

Noel Tata tabled the Chandrachud report before the Tata Sons board on September 17 and, citing that, argued that the casting vote of the Tata Sons chairman could not be used to override the specific affirmative voting rights provided to Tata Trusts' nominee directors.

Listing Matter

A public battle broke out on September 17 after the board of Tata Sons reappointed executive chairman Chandrasekaran for five years by a majority 4-1 decision. Noel Tata, chairman of the Tata Trusts that own the majority of shares in Tata Group holding company, cast the sole vote against the resolution. Venu Srinivasan, the other trust nominee on the board, favoured the reappointment.

The meeting took place in the backdrop of a decision by the Reserve Bank of India, which rejected Tata Sons' request to stay private and unlisted. The regulator clarified that its rules for shadow banks of a certain size, which are required to be publicly held, would be applicable to the company.

Tata Sons said its board resolved by a majority decision to reappoint Chandrasekaran as executive chairman and also resolved to "initiate steps to comply with the applicable RBI guidelines." Tata Trusts publicly said it considered the board decision on Chandrasekaran's appointment as illegal.

Independent counsel Vyapak Desai said there was no legal requirement to provide the video recording of a board meeting to a director.

"A director does not have an unfettered right to obtain the full copy of the video recording of the board meeting. But secretarial guidance and corporate governance measures indicate that the director may be allowed to view specific recordings to verify the discussion and give comments, if any, to draft minutes before finalisation," Desai said. "The recording, however, should be preserved till completion of the audit to ensure sanctity."

Tata Trusts and Tata Sons did not comment.

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Conflicting Legal Opinions

The Chandrachud report that Noel Tata tabled at the board meeting said a casting vote could not create a majority where the articles of association required a separate majority from a particular group of directors. In that reading, a deadlock between the two trust nominees cannot be overcome simply by invoking the chairman's casting vote, he opined.

Tata Sons' board also obtained legal opinion before the board meeting from senior counsel Sudipto Sarkar, where he said, on a plain reading of Article 121 of the AOA on voting rules, the chairman's casting vote could be invoked in two situations: where there is an equality of votes by the trust nominees or where there is an equality of votes after considering the votes cast by all directors. Accordingly, the expression "in the case of an equality of votes" may reasonably be construed as applying to either situation.

Soon after the board meeting, Tata Sons obtained legal opinions from former Chief Justice of India UU Lalit and retired Supreme Court Justice BN Srikrishna. Their reports upheld the validity of the September 17 board resolution, finding that the chairman's casting vote under Article 121 was properly used to break the deadlock and let the board's business proceed.